Confession: I'm not sure either. I know how I do it, so I'll share that, but I'm not sure it's the most efficient way. It's just the way I use. If you've got another method that really works for you, I'd use that.
Once the draft is complete, I print a hard copy. I write a long outline by hand before I draft, so I get that notebook, and my printed copy, and put them in one of those three ring binders we all used in school. This allows me to make small corrections on each page, and notes on wider reaching changes in the notebook. Corrections are always in red. Because it's tradition, I suppose. It separates my original outline notes from these corrections.
My first drafts need heavy editing, unless they're very short. I tend to lose track of details, misspell or even change names as I'm fitting my fiction writing time into the spaces in my life around other work and aspects of life. This is where I (hopefully) discover all the small mistakes I've made, and root out inconsistencies.
Then I spread out the laptop, the paper notebook, and the bound copy, and dig in. It's a painstaking thing. I have often wondered if everyone finds editing to be so challenging. Perhaps great literature springs forth from other minds whole and nearly perfect. But the more I read from other writers, the less I think this is true. The more I think we all struggle with a project like this that stretches over months, or even a year. So maybe that's ok.
So my novella, 'Maestro', is in the editing phase. When I have a clearer idea on how long it will be to completion, I'll post here, but for now, I enter the dark forest of editing without a flashlight, chased by nameless monsters.